Question

Ethical Dilemma: For generations, the policy of Sears Roebuck and Company, the granddaddy of retailers, was not to purchase more than 50% of any of its suppliers' output. The rationale of this policy was that it allowed Sears to move to other suppliers, as the market dictated, without destroying the suppliers' ability to stay in business. In contrast, Walmart purchases more and more of a supplier's output. Eventually, Walmart can be expected to sit down with that supplier and explain why the supplier no longer needs a sales force and that the supplier should eliminate the sales force, passing the cost savings onto Walmart. Sears is losing market share, has been acquired by K-Mart, and is eliminating jobs; Walmart is gaining market share and hiring. What are the ethical issues involved, and which firm has a more ethical position?

Answer 1

In my opinion, the ethical issues involved here are the elimination of jobs and exercising unnecessary control over supplier operations. Sears Roebuck and Company is responsible for the elimination of jobs as their failure to maintain the market share has resulted into the acquisition by K-Mart. They had to update their business strategies according to the changing market conditions and competition instead of relying on the policy set generations before. Their reluctance to accept change is the reason for the loss of jobs to the employees who worked with commitment for many years. Their ethical responsibility lies in protecting the employees and the organization instead of protecting the policies. Wal-Mart had acted unethically by putting unreasonable control over the suppliers and eliminating the sales force but they have passed the cost savings to the customers and also increased hiring through which many people got benefitted. Hence their decision cannot be considered unethical as it was necessary to stay in the business and they tried to pass the benefit to the society as well. Hence Wal-Mart has more ethical position.